Is Deflation Appearing?

Are we getting deflation? Isn't that's what the consumer products stocks are saying with their scorching run? Isn't that how Clorox (CLX) and Hershey (HSY) could take off like this on no news?

I know that some of this run comes from the continuing degradation of the housing market.

We are also seeing some pressure on the dollar again, which allows the translations from these heavily international companies to be bountiful in 2014.

But you have to think that maybe this is also one of those raw cost stories that may be too good not to check out. It's hard to imagine deflation on a day like today, when oil's moving back up. But you don't get this kind of move without a belief that next year will bring some terrific year-over-year comparisons on the basics: plastic, grains, cardboard (where there have been rate increases after rate increases, but they might be over) and gasoline, the biggest raw-cost contributor.

Stay close to this theory, which is something that Stephanie Link, co-portfolio manager of my charitable trust Action Alerts PLUS, suggested to me. It makes sense when you consider how strong the bonds have been, doesn't it? Or when you consider the flat-lining of the metals? If that's the case, these stocks have a lot more room to run.

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